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I LUV The Strong Dollar

Summary

I searched a strong dollar equity ETF & shareholder return ETF for the most appealing non-financial strong dollar stock.

I found that Southwest Airlines was the most appealing strong dollar stock.

Southwest Airlines has 45% upside and is perfectly positioned to take advantage of the strong dollar and low crude oil prices.

In this article, I will be searching for a stock that is well suited for a continued strong dollar environment. To start my search, I looked at the holdings of the WisdomTree Strong Dollar U.S. Equity ETF (NYSEARCA:USSD), which targets companies with the majority of their revenues from within the United States. I then added the holdings of the Cambria Shareholder Yield ETF (NYSEARCA:SYLD) to my search and looked for common holdings of those two ETFs. I chose SYLD because it only owns stocks that are returning cash to shareholders through dividends and share repurchases. By combining the holdings of each ETF and looking for common holdings, you end up with companies have a majority of their revenues coming from within the United States and are returning cash to shareholders.

USSD Index Description:

The WisdomTree Strong Dollar U.S. Equity Index measures the performance of U.S. based companies that derive more than 80% of their revenue from the United States. The Index is designed with a goal of minimizing exposure to companies with significant revenue from exports that are vulnerable to a strengthening U.S. dollar.
[USSD Index Description]

SYLD Index Description:

SYLD invests in 100 stocks with market caps greater than $200 million that rank among the highest in [A] paying cash dividends, [B] engaging in net share repurchases, and [C] paying down debt on their balance sheets.
[SYLD Description]

Strong Dollar Candidates

After combining the holdings of USSD & SYLD, I found that there were twenty-five companies, which were in both ETFs and are listed in the table below. For the purposes of this article, I will be focusing only on non-financial related stocks in my search for strong dollar candidates.

DR PEPPER SNAPPLE GROUP I

(NYSE:DPS)

Fundamental Screen

I then took the above list and eliminated any financial related stocks as I noted above. I then put the remaining stocks in the FinViz stock screener to run through my fundamental screen using the following criteria. The most important of these criteria for the purposes of this article, is to have a low long-term debt to equity ratio. If interest rates are rising, companies with low debt will be hurt...


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